The year 2020 turned out to be groundbreaking for the Indian stock markets. Millions of young investors connected with the volatile yet immensely rewarding world of Indian equities and many of them made handsome profits.

As they set out on their new journeys there is a lot that young millennial investors have to learn, embrace and cultivate in their investing and trading styles.

It is important that these new investors follow a few key principles and invest in prominent financial instruments effectively ensuring that they not only cultivate their savings over the long term but also attain important life goals.

Without a good investment plan which clearly marks out a goal and a time frame, some of the wisest, most astute investments can come undone. It is necessary to have a smart and reliable financial advisor who understands your goals and tailors good investment plans to help meet them.

Additionally, you should also ensure that your portfolio has the following investments:

1. Mutual funds:

There are several investors out there who have burnt their fingers by investing in the stock markets. Many of us are foolish with our money and have inflated opinions about our fund management skills. It is only after losing our money that we understand the real value of finance professionals and their expertise. Mutual funds are essentially investments that are managed by expert fund managers who can steer your funds deftly through the ups and downs of the volatile equity markets.

There are many different types of mutual funds that will cater to your time frame, your risk profile and propel your investments into earning potentially fruitful returns. A SIP or a systematic investment plan helps you in building your wealth in the long run by collecting monthly or quarterly instalments from you. It may be that in the short term or during periods of extreme macro instability your investments might wobble and not give you stellar returns. However, patience, more often than not, pays off in the markets. Many investors who resisted the temptation of diluting their investments enjoy higher market returns during market peaks.

2. National Pension Scheme:

Age catches up with us faster than we realise and money runs out sooner than we can anticipate. Given the frequent turmoils that the global and domestic economies keep tail spinning into, one needs a safe haven to park his or her money for a secure old age abundant with resources. The National Pension Scheme is a retirement scheme open to all citizens between the age of 18 to 65. One can keep contributing to it till the age of 70. The scheme was started in 2004 with an intent to redesign the existing system of pensions in India. Under the NPS, an individual gets the choice to invest in different funds. An individual has an option to invest from three different funds, however, it is important that he continues with his investment for at least a year before he decides to switch. Additionally, the investor gets the benefit of exemption as mentioned in section 80C of the Income-tax Act making this scheme absolutely essential for your portfolio.

3. Health insurance:

One is only inviting financial ruin if he or she thinks that they do not need health insurance in this day and age where medical expenses and hospitalisation bills can strip you to the very bone. It is an essential instrument to safeguard your standard of living against unanticipated medical and surgical expenses. It will also help you pass on a legacy unencumbered by mammoth hospital bills to your children.

4. Fixed Income options:

In the last few years, investment in fixed income options has taken a drubbing and investments in equity markets have taken the front seat. However, there are several investors whose risk profiles do not align with the volatility in the share market. It is for these classes of investors that fixed investment options deliver the right returns. Currently, there are a number of corporate deposits fixed income options in the market that allow you to deposit your money with high-investment grade companies that deliver consistent returns.

Capital tax-saving bonds are other options, however they are geared towards saving your wealth from capital gains tax. In case you have sold a residential property, you are eligible to pay short-term capital gains tax on it if you have sold it within two years of purchasing it. Alternatively, you are liable to pay long-term capital gains tax on it if you sell it two years after purchasing it. To save the capital gains tax, you can choose to invest in capital tax-saving bonds. However, that will lock up your funds for a period of five years

5. Sovereign gold bonds:

For those who are inclined towards making traditional investments, gold is often considered to be the best choice. However, storing gold at one’s house carries safety and security risks. On the other hand, the Sovereign Gold Bond backed by the Indian government is a better alternative that not only lets you possess gold in a demat form but also lets you earn interest on it. The minimum amount of investment permissible in these bonds is 1 gram and the maximum is 4 kgs for retail investors and HUF. One receives a fixed return of 2.5% per annum and the interest is payable on a half-yearly basis. The returns are taxable as per one’s income tax slab. However, no TDS is deducted from the interest return. The bond has a tenure of eight- years and a lock-in period of five years. One can exit the bond after five years.

While there are many other avenues for investment, these are some of the good investment options that can help investors shore up their portfolio. To be protected in the financial whirlwind of our lives, it is necessary that we diversify our investments and ensure that our savings are not invested in one asset class alone.